The Federal Court has declared that a number of clauses in NetSpeed’s standard form consumer contracts are unfair, and therefore void, following action by the ACCC (Australian Competition and Consumer Commission).
NetSpeed Internet Communications is the trading name of ByteCard Pty Ltd, against whom the action was brought. As well as Internet connectivity, it provides domain registration, hosting and web design.
“This is the first time the ACCC has commenced legal proceedings based exclusively on the new unfair contract terms provisions of the Australian Consumer Law,” ACCC Chairman Rod Sims said.
The Federal Court declared that clauses 1.7, 4.1, 4.2 and 6.5 of NetSpeed’s standard terms and conditions are unfair contract terms which:
- enabled NetSpeed to unilaterally vary the price under an existing contract without providing the customer with a right to terminate the contract.
- required the consumer to indemnify NetSpeed in any circumstance, even where the contract has not been breached and the liability, loss or damage may have been caused by NetSpeed’s breach of the contract.
- enabled NetSpeed to unilaterally terminate the contract at any time with or without cause or reason.
The terms were considered unfair as they created a significant imbalance in the parties’ rights and obligations and “were not reasonably necessary to protect NetSpeed’s legitimate interests.” NetSpeed has also been ordered to pay a contribution to the ACCC’s costs.
“This is a positive outcome for consumers and acts as a warning to businesses,” Sims said. The ACCC won’t hesitate to take action against businesses who continue to include unfair terms in their standard form consumer contracts.
“The Court’s declarations in this matter is a timely reminder for all businesses to review their consumer contracts to ensure that potential unfair contract terms are removed or amended.”
The matter was brought to the ACCC’s attention by user group ACCAN (the Australian Communications Consumer Action Network). In March, the ACCC released the report Unfair Contract Terms Industry Review Outcomes, which identified a number of problematic terms in standard form consumer contracts.